A brief meeting in judge’s chambers Wednesday afternoon cut short a brewing turf war between one of the most prominent lobbying shops in Texas and its new rival. Mega-firm HillCo Partners dropped its lawsuit against its former associates, Brandon Aghamalian and Snapper Carr — the surprise result of a hearing that had been scheduled to address HillCo's request for a temporary restraining order.

The decision comes a day after the defendants filed their response to HillCo’s complaint. HillCo accused them of tampering with contracts to make it easier to lure away clients when they left and of sharing business secrets with their new firm, Focused Advocacy, which HillCo also sued. In their response, Aghamalian and Carr said they left the firm because of conflicts of interest involving the firm’s municipal and private sector clients. They also described an “increasingly hostile” workplace environment that that allowed firm employees to "continually use unprofessional, insensitive, and derogatory references to both clients and elected officials" and a "lack of attention and disregard for regulatory and ethical compliance."

“I think after the filed answer, HillCo decided it wasn’t good for business. And that was the nature of the judge's speech,” said a lobbyist who was in the courtroom and didn’t want to be named. Aaron Day, a lobbyist for the Texas Trade Association, observed: "In the world of lobbying, tensions often run hot and the stakes are often high, but in the end opponents are easily forgiven and professionalism carries the day.”

Since HillCo first filed its petition, the lobby community has observed the proceedings with acute interest. A longtime lobbyist who spoke on background said some in the community “enjoyed watching the soap opera,” but many insiders feared that opening the door to the courtroom could pave the way for legal warfare in the intensely competitive profession.

"It will be interesting to see, going forward, whether this was a unique situation, or whether the way the lobby interacts with each other is forever changed,” said Jack Erskine, a lobbyist with K&L Gates. “I don't think we go back to status quo. I think people in the lobby will look at the world through a slightly different prism, just because the lawsuit was filed … and it's never happened before.

HillCo sued its former partners after they quit in January and took a stable of clients along with them. The suit alleged that the pair conspired with Curt Seidlits — the former lawmaker who founded the firm Focused Advocacy — to change contracts and delay renewal agreements with the groups they represented.

When the parties gathered in the courtroom of District Judge Scott Jenkins, he "implored everyone before the process started to try and settle, and offered them an opportunity to do so," said lobbyist Lawrence Collins, who attended the hearing.

Both sides agreed to keep their settlement agreement confidential. "We're writing the agreement now, and neither side is going to be saying or releasing anything," said HillCo principal Bill Miller moments after the hearing. A call to Focused Advocacy attorney Mike Slack was not returned. HillCo attorney Hamp Skelton would not discuss the details of the deal, either. With the lawsuit dropped, details of the discussion won't likely become public, and both parties — and their clients — are saved the inconvenience and potential embarrassment of a trial.

"Frankly, this seems to be the most logical way for both sides to proceed," said Jack Gullahorn, a former hired-gun lobbyist who is now the president of the Professional Advocacy Association of Texas, a trade association for lobbyists. "Both sides have high-quality professionals that try to do a good job, and disputes like this only take away from their efforts to effectively serve their clients."

Neither side would comment about where the clients in question would end up, but several current Focused Advocacy clients said Wednesday afternoon that they hadn’t yet heard of the latest development in the suit. Charles Anderson, the attorney for the city of Irving, said he was not even aware that the two firms were in litigation. Though the city had been a long time client of HillCo’s, Anderson said, they chose to go with Aghamalian and Carr when they left to join Focused Advocacy because they had been the city’s main contacts at HillCo. The city is still evaluating what its lobbying needs will be for the coming session, Anderson said, and hasn’t decided whether it would stay with Focused Advocacy or not.

Aghamalian and Carr also counted the city of Fort Worth among their largest clients while the two were working at HillCo. Now, it's unclear where Fort Worth's lobbying dollars will wind up next session. Contacted on Wednesday, Fort Worth's director of governmental relations, Reid Rector, said he hadn't yet heard the case was dismissed but that "it's nice to know." Fort Worth is currently without a contract lobbyist for the 2011 session. Its contract with HillCo expired in the spring. "We weren't even aware of tensions when we decided not to renew earlier in the year," Rector said.

Later this year, the city is likely to re-open the bidding process for its business. "I would say in all probability we are going to move in that direction," Rector said. "In which case, HillCo will have an opportunity to submit a proposal. Aghamalian and Carr, they would submit a proposal, and anyone else interested in representing Fort Worth in Austin would also be given an opportunity to submit a proposal."

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